A trader wants to open an oil shop in the Greater Jakarta area with a choice of the Bogor, Jakarta area or Bekasi. Each of these area options has a local supplier providing The price quote for the oil is detailed in the table below. area fixed cost variabel cost Bogor 5.500.000 55.046.00 Jakarta 11.500.000 35.500.00 Bekasi 21.500.000 15.500.00 Question: A. What is the large volume that must be met in order to get economic value per area? Define the volume range for each area. b. Sketch a crossover diagram that illustrates these conditions c. If in the end the merchant wants to sell as many as 600 cans at a selling price of Rp.60,000 per can, calculate the profit from each area. Where did the trader determine his location?

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter18: Asymmetric Information
Section: Chapter Questions
Problem 18.10P
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A trader wants to open an oil shop in the Greater Jakarta area with a choice of the Bogor, Jakarta area
or Bekasi. Each of these area options has a local supplier providing
The price quote for the oil is detailed in the table below.

area fixed cost variabel cost
Bogor 5.500.000 55.046.00
Jakarta 11.500.000 35.500.00
Bekasi 21.500.000 15.500.00

Question:
A. What is the large volume that must be met in order to get economic value per area? Define the volume range for each area.
b. Sketch a crossover diagram that illustrates these conditions
c. If in the end the merchant wants to sell as many as 600 cans at a selling price of Rp.60,000 per can, calculate the profit from each area. Where did the trader determine his location?

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